Air service to N.O. hasn’t taken off
By Jaquetta White Business writer
When the American Library Association brought its annual conference to New Orleans last month, tourism officials praised the return of the city’s convention business. But while the 18,000-person conference was largely regarded as a success, the event also exposed the limits of the city’s post-Hurricane Katrina air service.
One attendee had to drive to the conference from Houston after her flight from San Antonio was delayed, causing her to miss a connecting flight to New Orleans. There wasn’t another available seat for two days. And some conference sessions were canceled when speakers couldn’t get flights into the city.
The challenges illustrate the difficulty in getting the tourism industry up and running while there are only two-thirds the number of flights and about half the number of seats there were before the storm.
It’s a chicken-and-egg dilemma: If there were more visitors, including conventioneers and tourists, there’d be more flights, but the reduced air service is making it harder to attract these travelers.
Interestingly, business travel to Louis Armstrong International Airport, an important source of airline profits, has jumped since Katrina, as a result of what interim airport director Sean Hunter calls “artificial citizens” of the city — government and corporate employees who are regularly in and out of the New Orleans area as part of the recovery effort.
Nearly a year after Hurricane Katrina grounded air travel into and out of Armstrong Airport, there are 107 daily departures to 33 cities, compared to 166 departures to 42 cities before the storm.
But the sheer number of post-Katrina flights can be a deceptively optimistic measure because many airlines are using smaller planes on their New Orleans routes. The airlines now offer 12,000 daily seats on flights through New Orleans, slightly more than half the 21,000 seats available on an average day before the storm.
Air service to New Orleans — vital before Katrina — is even more important now as local officials work to convince leisure travelers and conventioneers that New Orleans is indeed capable of accommodating them.
Stephen Perry, president of the New Orleans Metropolitan Convention & Visitors Bureau Inc., said the recovery of air service to the city since the storm has been “positive but incremental.” Nonetheless, it’s still “not sufficient with where we want to be with some of the larger conventions that want to come here later in the year,” Perry said.
What’s more, abundant air service is also necessary to retain and attract the corporate businesses that will help to put the local economy back on its feet. At least one company says limited air service was a factor in its decision to relocate from Metairie to Atlanta.
It could be a while before air service to New Orleans returns to pre-Katrina levels. And it’ll take more than loyalty to the city to bring airlines back, industry leaders say.
Partly that’s because Katrina’s aftermath has coincided with a second calamity: skyrocketing fuel prices.
“It would be a bad decision for them to come back to New Orleans just because you feel bad for New Orleans,” said Terry Trippler, an airline expert at myvacationpassport.com. “In years past, airlines might have done that; now you can’t do that with oil at more than $80 a barrel.”
But experts agree that air service to the city eventually will improve.
“This is not the time to panic. You’re New Orleans for crying out loud. This is not some backwater,” said Michael Boyd, an airline expert and president of aviation consulting firm The Boyd Group. “There may be this fear that air service will never come back to where it was. That’s crazy. It certainly will.”
Industry tightens belt
The slow return of air service to New Orleans is in part a symptom of larger business challenges in the industry. With record high jet fuel prices and several airlines either in bankruptcy or on the brink, carriers are operating more efficiently than ever. Their goal, at least for now, is to put fewer airplanes in the sky, not more.
Also working against New Orleans is that it is “geographically situated in the center of many hubs,” Hunter said.
Many of the flights in and out of New Orleans are to the larger airports of Dallas, Atlanta or Houston, for instance. It is much more fuel-efficient to fly a smaller jet on those short routes, Hunter said.
“With a jet, by the time it reaches cruising altitude, it’s time to descend. That burns more fuel,” Hunter said. “So they use smaller planes, which means fewer seats.”
Before Katrina, Perry said, airlines that flew into New Orleans did so with planes only 70 percent full, and now they are 90 percent full on average. When conventions come to town, there is little room for the additional travelers. But full planes aren’t always enough to overcome industrywide economics that discourage airlines from adding flights.
“Though we’re obviously working hard to change it, those are business decisions that the airlines make,” Perry said.
New Orleans is in a precarious position. The city desperately needs to increase air service so that convention and leisure travelers are not turned off by limited flights into and out of the city. But the airlines want the city to prove that it has the demand to justify any increase.
“This is a situation where a lot of things have come together that don’t really enhance air service right now,” Boyd said. “The challenge you’ve got is carriers are not in a position to add more airplanes. They are improving their financial position by not flying as much.”
To be sure, there are airlines that are close to reaching pre-Katrina load capacity. American Airlines, for instance, has direct service between New Orleans and five of the six cities it flew to before Katrina and has increased seating capacity to those cities to 89 percent of its pre-Katrina offerings. Meanwhile, Continental Airlines is at nearly 100 percent in both categories.
But several of the largest carriers at the airport have been slow to return.
Delta Airlines, the city’s second-largest carrier in New Orleans before Katrina, has slipped to fourth since the storm. The airline, which filed for bankruptcy protection in September, has returned only 46 percent of the seats available last year.
“A year ago, obviously, we were not in bankruptcy. We’ve had to retire some aircraft since then,” said Anthony Black, a spokesman for the airline. “We’ve had to look and see where we are going to continue service. We’ve had to do these things regardless of Katrina.”
Delta is not alone. Across the board, airlines have been replacing large planes with smaller ones, increasing “load factor,” or the number of people aboard each flight, and in some cases raising rates.
The adjustments are in response to the record high price of jet fuel, which has climbed along with the price of crude oil. The price of jet fuel averaged about $89 per barrel in June, up from about $71 per barrel in the same month last year, according to the Energy Information Administration.
“What we’re doing in this environment is more responsible flying,” Black said.
The same goes for Southwest Airlines, the city’s leading carrier both before and after Katrina. While Southwest used to be the largest carrier at the airport by a long shot, it’s now ahead of its competitors by a much smaller margin. The airline is offering just 42 percent of the seats it had available before Katrina, 3,258 seats on daily service to 10 cities, compared with 7,809 seats on service to 17 cities before Katrina.
In the weeks following the hurricane, Southwest used some of the planes it had been flying to New Orleans to launch new service in Denver. That service has proved wildly popular, and as a result, Southwest is in the enviable position of having more demand than planes.
But that doesn’t mean New Orleans is about to get an infusion of Southwest service, spokeswoman Paula Berg said.
“We’d love to grow in New Orleans. We’d love to be bigger than we were in New Orleans,” Berg said. “Our desire is there, but it will be conservative growth.”
Southwest’s diminished role in the New Orleans market has proved especially costly to travelers. Southwest is known as a discount airline, and its presence in a market usually forces competitors to lower their fares. Now that it has fewer local flights, the airline is less of a price leader in the New Orleans market.
Trippler said Southwest’s measured response is the best gauge of how quickly air service will return.
“Southwest is not one to pass up an opportunity. They are not one to give up this dominance they have in New Orleans,” Trippler said. “The only thing that would cause them to back off is lack of business. This is an extremely well-run airline.”
Business traveler is key
The visitors bureau is putting together a task force to work with airlines to increase service to New Orleans, Perry said. The group will provide the airlines with the city’s convention schedule in an attempt to “show them the steady increase of our visitor base.”
That could lead to improvements sometime in the spring, Perry said, but for now the only way air service will improve is if airlines see a significant increase in demand.
“The reality is that it is a demand-driven issue,” Perry said.
While there are spurts of significant demand in New Orleans during major conventions and events, such as the Sugar Bowl, there is little sustained demand, particularly from business travelers, to justify maintaining stepped-up service between special events. It’s a problem the city has had for years.
“What would happen is planes would fly in full with convention-goers but then they would fly out empty or with reduced occupancy because there was no business travel going out,” Perry said. “That’s why we are so involved with GNO Inc. and the chamber (of commerce) and the mayor’s economic development office.”
The problem, a perennial one, was only exacerbated by Katrina. Mark Drennen, president and CEO of GNO Inc., said air service is one of many issues the economic development agency is addressing right now.
“The business traveler is critical. You’ve got to have the business traveler. If you don’t have a core number of business travelers, you’ve got a tough row to hoe,” Trippler said. “It’s one thing if you’re an Orlando or a Las Vegas. They are year-round destinations. New Orleans has its ups and downs. The economic development department has to be working overtime to get that business traveler to come to New Orleans to stabilize the air service there.”
The airport is trying to convince airlines that New Orleans is closer than it has ever been to providing them with steady business traveler demand. The frequent traveling of workers in town to help with the city’s rebuilding, Hunter said, has altered the New Orleans market.
“We’ve created an artificial citizen, someone who temporarily has become a citizen of New Orleans,” Hunter said. “So we have more business travelers than ever before.”
Those travelers represent an especially lucrative market for the airlines because they are more likely than conventioneers to pay a higher rate because they book flights at the last minute using expense accounts, Hunter said.
But it has been a challenge getting airlines to agree with that assessment, Hunter said.
“They’re watching.” he said. “But right now everyone is taking a wait-and-see attitude.”
There’s no real hard-and-fast formula for calculating how great that demand would have to be before the airlines start adding service, he said.
“You and I could get into Fort Knox and play with the gold bars before we could find out the formula the airlines have,” Trippler said. “When those load factors get to the point where I want to get to New Orleans but I can’t get there or I want to leave New Orleans but I can’t leave, so I’ll stay home,” then airlines will add seats here, Trippler said. That is not yet the case.
Waiting for an improvement became too much for Safeguard Storage Properties LLC of Metairie, which announced in May that it was relocating to Atlanta. The company said limited air service was one of the reasons for its move.
“Our biggest problem is that there are limited flights to New York from New Orleans,” said Angel Tetrick, who books the company’s flights. “I fly Gulfport (Biloxi Regional Airport) whenever I can.”
Jaquetta White can be reached at firstname.lastname@example.org or (504) 826-3494.